Housing in the New York Metropolitan Area

Appraisal and Valuation Issues has a great post on the state of housing in Nassau and Suffolk counties on Long Island. James R. MacCrate, MAI, CRE, ASA approaches housing prices from the standpoint of affordability based on median family income. A few statements in that post that I find very interesting:

1. In the New York Metropolitan area, prices have been falling at an accelerating rate that is expected to continue into 2010 and maybe beyond. Unemployment has been increasing, with major layoffs starting at the end of 2008. As a result, the impact on housing in Manhattan and the surrounding suburban areas will escalate throughout 2010.
2. As the Federal Reserve lowered interest rates after 9-11 and underwriting rules relaxed, as witnessed by the re-introduction of low doc, no doc loans and the proliferation of adjustable rate mortgages, prices began escalating quite rapidly until peaking in 2006.
3. The median cost of housing on Long Island escalated to more than 37% as homeowners took on more debt, real property taxes increased, and utility costs escalated. In fact, some reports indicate that cost of homeownership on Long Island is in excess of 40%....If we excluded the wealthier communities, especially along the North Shore of Long Island, the cost of home ownership far exceeds the standards recommended by Fannie Mae and other government agencies.
4. Prices are not expected to stabilize until they fall to a point where the cost of homeownership is in line with the long-term average housing cost.
5. Median home prices in 2007 are more than 20% higher than they would have been had banks relied on normal lending standards.